Housing Recovery Speed Bump: Foreclosure Filings Rise in February

NEW YORK – More U.S. homeowners were hit with new foreclosure filings in February, pointing to the challenges the market still faces even as the housing recovery gains traction, data from RealtyTrac showed on Thursday.

Foreclosure starts were seen on 71,488 homes in February, up 10% from the month before, though that was still down nearly 25% from a year ago.

Many of the states that saw the biggest increases in new filings either deal with foreclosures through the court system or have recently implemented legislation that has slowed the process down, said Daren Blomquist, vice president at RealtyTrac.

"Foreclosures have been contained as a threat to the housing market but there's still hot spots in the foreclosure market in different states that need to be stamped out," said Blomquist.

The U.S. housing sector got back on its feet last year, contributing to overall economic growth for the first time since 2005 as house prices and sales improved, and inventories tightened.

Repossessions fell more than 10%, with banks seizing 45,038 homes, as lenders turned to foreclosure alternatives such as loan modifications and short sales, in which the struggling homeowner is allowed to sell the property before it is foreclosed.

Although repossessions are still at an elevated level, February's amount was less than half of the peak of 102,000 homes that were seized in September 2010, Blomquist said.

Overall foreclosure filings - which include default notices, scheduled auctions and bank repossessions - were reported on 154,281 homes, an increase of 2% from January.

Florida had the highest foreclosure rate for the sixth month in a row, as one in every 282 homes there saw a foreclosure filing. That was more than three times the national average of one in every 849 homes.

As well, seven Florida cities ranked among the top 10 metros with the highest foreclosure rates.